personal finance: career arc career track middle class
- November 2014 (2)
- October 2014 (5)
- September 2014 (2)
- August 2014 (5)
- July 2014 (5)
- June 2014 (3)
- May 2014 (8)
- April 2014 (4)
- March 2014 (6)
- February 2014 (6)
- January 2014 (5)
- December 2013 (3)
- November 2013 (6)
- October 2013 (5)
- September 2013 (5)
- August 2013 (4)
- July 2013 (7)
- June 2013 (5)
- May 2013 (4)
- April 2013 (4)
- March 2013 (4)
- February 2013 (6)
- January 2013 (5)
- December 2012 (3)
- November 2012 (3)
- October 2012 (8)
- September 2012 (10)
- August 2012 (5)
- July 2012 (7)
- June 2012 (5)
- May 2012 (12)
- April 2012 (5)
- March 2012 (5)
- February 2012 (5)
- January 2012 (7)
- December 2011 (6)
- November 2011 (8)
- October 2011 (6)
- September 2011 (3)
- August 2011 (8)
- July 2011 (5)
- June 2011 (8)
- May 2011 (7)
- April 2011 (9)
- March 2011 (9)
- February 2011 (3)
- January 2011 (8)
- December 2010 (10)
- November 2010 (7)
- October 2010 (10)
- September 2010 (8)
- August 2010 (6)
- July 2010 (10)
- June 2010 (13)
- May 2010 (10)
- April 2010 (16)
- November 2007 (1)
In the movie Grease, there is one of those High School graduations that the Americans do so well, when on the last day of school there’s one big party, the sun is blazing down and everybody thinks the world is their oyster.
As the last roll-call ever is read out on prom day, the principal posits that somewhere there is a future Eisenhower, the next JF Kennedy etc, and the camera zooms in on the kids going all starry eyed as they picture themselves as POTUS.
Well, that’s a movie, so real kids may have different dreams, but I bet few of them will have
flushing their life away in 40-hour increments in exchange for enough money to keep a roof over their head, put food on the table, and buy the occasional electronic gadget to distract them from how miserable their lives are.
as part of their dreams. Hat tip to Philip Brewer for the quote Inspired, in a depressing “abandon all hope, ye who enter here” way.
You also never get the view from the other end of the telescope. So I thought I’d look at how it worked out for me, now that I am on the glide path towards the end of my working life.
I was a geek at school. Science was what interested me, how stuff worked, and how it could be made better. Those were more innocent days, when we believed that science would help us to make a better world, “Limits To Growth” had not taken hold, we were scared of global cooling but not very much. Oh and we made things in Britain – the financial sector was not so huge a part of the economy as it is now.
So I did sciences at A level; in those days that was chemistry, physics and maths, not “general science”. I then did Physics at uni, and emerged, wide-eyed and innocent into the world of work in 1981. That was a world in which Margaret Thatcher was having her first recession, which destroyed jobs, particularly for young ‘uns, so I filled in the UB40 form for six months.
Ignoring that nasty little matter, what I had seen of the world so far was a reasonable expectation of getting a middle class job in a research facility in industry, with a salary that rose quickly from the graduate scale, and then slower. When I started work people stayed much longer with a company, and there was less roiling change of areas of expertise. They tended to get into an area and then pick up experience and deepen their expertise along the way, which was associated with better pay and seniority. My expectation of a career salary was something like this
This wasn’t totally arbitrary, by the way. It was observation, by looking at the starting salary offered a young pup like me, and looking at the salary of a greybeard about to retire. The ratio was around 3:1 and the graduate scale usually rose a bit faster for the first few years. In those days white collar jobs usually had a retirement age of 60.
So what happened? It was difficult to analyse because I don’t have exact figures for my salary every year, so I have interpolated some years. The figures are rebased to 2010 pounds using inflation info from here, and the gross values corrected for 2010 tax and NI to derive the graph. The total is then normalised to my net income from my first job = 1. So there’s a fair number of fudges; I’ve ignored bonuses, I’ve ignored employer’s pension contribution, ISA income. Taxation of income has varied slightly over the 30 years too, but not hugely compared to the uncertainty of the data.
In my expectations I didn’t allow for running into the headwinds of progressive taxation, and my recollection is that fewer people paid higher rate tax 20 years ago anyway. So my actual salary is under-represented and my expectations are slightly too optimistic at the tail end of my career.
The complicated stuff at the end of actuals is because I intend to live on less than my pension in the 8 years leading up to drawing it, these are assets I have in ISA cash and linkers. I don’t need to work as I don’t have a religious fear that the Devil will come and get me if I don’t work.
I changed job three times in the first eight years of working and took a year out to do an MSc to fix my less-than-stellar BSc. My first job was a junior test engineer job, with what I remember as a fairly paltry salary. I was chastened to enter it into the inflation rebaser to find it was quite considerably more than the current national minimum wage in 2010 terms.
I then worked for the BBC for three years and saved enough to pay my living costs for the MSc, though hat tip to the Manpower Services Commission who gave me a grant for that. I was more savvy then and had a BBC job in London lined up after the course, and then gave this up after a year to come to work in Suffolk when I realised I would never be able to buy a house in London. And here I have been for over 20 years.
Work is an important part of life, and it’s worth putting the effort into getting it right, particularly when you are young and you need to get set on the right path. Hence all the chopping and changing early on.
In retrospect I made one crucial error when my current company asked me what I had got at the BBC. I should have said it was in the ballpark of what it was inflated 10% – enough to be credible, and it would have put me onto a higher grade. I was naive and said what it was more or less exactly
Your greatest chances of salary advancement are at points of change. It’s why even if staying within a company those that want to get on have to change jobs frequently. I haven’t done this, and you see the result on my career track as a shifting of the progression towards later years. I snuck in to the progression and seniority path just as the portcullis was coming down. That route isn’t really possible now in most private sector jobs. True, I did have a few good projects, but nowadays in-post promotions are virtually impossible. The whole working environment has been degraded by increased short-termism, outsourcing and fads like the current daft ‘performance management‘ rubbish.
Having done all the chopping and changing to at least get where I was, doing what I wanted to be doing, I figured it was time to kick back a bit and develop non-work areas of life. I languished for nearly 10 years on the lower grade. I had a good time; the work was interesting and I got lots of foreign travel on the company at the right time in my life, when I was single so being away a lot didn’t cause me any problems.
The second recession instigated by Margaret Thatcher queered the pitch for me there. At least that was eventually the cause of her downfall, defenestrated by her own party who were scared that a second dose of austerity would get them slaughtered in the polls. Companies don’t promote people very much in a recession because they don’t have to. They know it’s harder to find jobs, and indeed mine was downsizing then anyway. Hence the flatline before the first uptick, 17 years in to my working career, though at least I had an annual increment so I was getting slowly ahead of inflation.
The good times rolled after that with a couple more promotions in the boom that ended in 2007, and we all know what did for that, hence the flatlining again during this bruising recession.
So how did I do, what would I say to that starry-eyed younger self? Financially, I did better than I had expected, I’m now above the anticipated high-water mark about 10 years early. For most of the time I had the right amount of fun, and I didn’t get into any debt other than a mortgage. I was going to try and factor in the mortgage to my career arc but I don’t have good enough data for that. Errors are cumulative and Excel indicates I can’t have paid it off yet. Well, Excel, you’re just plain wrong, pal. I even managed to get away with writing off a whole years gross salary twice due to various life events, one of which was being a dipstick and buying a house in 1989 at the top of the market.
So my younger self did well, I’d buy him a beer or two. I got the idea for this post from Early Retirement Extreme’s What You Need To Know About The Different Kinds of PF Blogs and the graphical presentation. Since I would probably fall into the Career Track classification, I might as well pinch Jacob’s graphical idea and picture my career track His graph showed something subtly different, of course.
On ERE’s scales, I had been following the late retirement track via my company pension scheme. I am too old for extreme early retirement, and marginal to swing his Early Retirement between 40 & 50.
Several things are interesting, and sobering, about looking back over my earnings this way.
I have been working for just short of 30 years. I have improved my nett income by about three times in real terms compared to my first job. The numeric value of my salary is over 10 times that first pay cheque. I can quite reasonably expect to see another 30 years, so I have a visceral understanding of inflation. Rust never sleeps, and inflation is busy eating away at paper assets.
If I were 30 years younger, my prospects would probably be much poorer. I would never have gone to university with the current system of loans. With 33% of people going to university instead of <10% when I started, the only way of covering the costs is to charge the students. I would not have taken that chance, since my parents weren’t white-collar workers, and the idea of starting out in hock would have scared the hell out of me.
I am not so sure that Tony Blair’s idea of sending 50% of 18-year olds to university was so great, as it also meant trashing the support system, devaluing the entry level BSc degree in the eyes of employers, and trapping young people in debt slavery right from the start.